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There’s been a significant amount of corporate restructuring since 1999, with mergers and acquistions making up the bulk of it, but the full impact on pension benefits across all industries remains murky because of the “limited data” available, according to the Government Accountability Office.

Some pension and restructuring experts said it was hard to attribute specific pension benefit changes to restructuring events, GAO said in a new report, “Retirement Security: Trends in Corporate Restructurings and Implications for Employee Pensions.”

For one thing, the report noted that a particular restructuring event “may not specifically trigger or cause a change to pension benefits.” However, “alternatively, pension benefit changes may be made with or without regard to any underlying restructuring event,” it said.

Key sources of restructuring data, including Bloomberg, haven’t specifically been intended to track changes in pension benefits and data has not been “exhaustive of all types of restructuring events,” GAO said. For example, a corporation could introduce measures that slash its workforce and future pension obligations, but such measures weren’t in the datasets GAO analyzed, it said, noting that it examined trends in corporate restructuring since 1999 and their implications for pension benefits.

Comprehensive data that details the effects of corporate restructuring on retirement benefit plans simply doesn’t exist, it said.

One expert pointed out that, as with corporate restructuring events, an acquiring firm will often “harmonize their benefits so the target firm’s benefits are made similar to the acquiring firm,” GAO noted. As a result, some employees may obtain access to another firm’s pension and benefit programs, it said.

Other experts told GAO that a corporate restructuring could also prompt a company to “rethink its companies’ employee benefit structures,” it said, adding that a few experts said there was less time for some stakeholders, including employees and retirees, to determine how the restructuring would affect their pension plan. As a consequence, those experts said impacted stakeholders, including retirees, “may be excluded from certain negotiations,” GAO said.

Bankruptcy reorganization might help a company eliminate or restructure debts it can’t repay and could help creditors receive some payment in an equitable manner, it went on to say. But bankruptcy “can be a contentious process where stakeholders compete for assets that are often diminishing in size,” and employees could lose access to an employer-sponsored pension, GAO’s analysis of the UCLA-LoPucki Bankruptcy Research Database (BRD) data found. On average, companies may emerge from bankruptcy with more than 25% of their employees slashed from the payroll, it noted.

For the report, GAO reviewed and analyzed Bloomberg Terminal data on M&A and other types of restructuring events from 1999 through 2018, analyzing completed corporate restructurings of at least $100 million in completed value in 2018 dollars. GAO also analyzed BRD data for information on large, public bankruptcies that occurred from 1999 through 2018.

The most well-known bankruptcies in recent years have included the retailers Toys ‘R’ Us (in 2017) and Sears Holding Corp. (in 2018), which led to significant job losses. Amazon’s acquisition of Whole Foods Market in 2017 and CVS Health’s purchase of Aetna in 2018 have been among the many other high-profile restructurings in recent years.

Sears filed for bankruptcy in October 2018, and its case is still pending, but on Feb. 11, 2019, the Pension Benefit Guaranty Corp. (PBGC) took responsibility as trustee for Sears’ two DB pension plans, GAO noted. PBGC and Sears agreed to end the plans as of Jan. 31, 2019 and, according to PBGC, at the time of plan termination, the two plans combined covered about 90,000 workers and retirees of Sears, Roebuck and Co. and Kmart Corp., GAO said.

In September 2005, GAO reported the terminations of pension plans by US Airways and United Airlines resulted in $9.7 billion in claims on the PBGC single-employer insurance program, and plan participants were estimated to have lost more than $5.3 billion in benefits that weren’t covered by PBGC, GAO also pointed out in the new report.

The former auto supplier Delphi, spun off by General Motors in 1999, filed for bankruptcy in October 2005, and from October 2007 to November 2008, Delphi froze benefits in five of its six pension plans, GAO noted. The “new” Delphi, which bought the “old” Delphi’s operating assets, didn’t assume sponsorship of the company’s pension plans, GAO said, pointing out that, despite efforts to keep the pension plans going, PBGC terminated all six of Delphi’s U.S. qualified DB plans in July 2009.

Although those examples “illustrate some of the potential effects of restructurings on pension benefits, less is known about the effects of corporate restructurings on pension benefits more broadly,” GAO said.

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